Mack Trucks' deliveries continued their slump in June

Company sold 1,649 units this year, compared with 3,076 in 2006, before new emissions standards.

July 26, 2007|By Spencer Soper Of The Morning Call

Mack Trucks' deliveries continued their expected slump in June, dropping 46 percent from the same month in 2006, its parent company Volvo AB reported Wednesday.

Mack delivered 1,649 trucks in June, down from 3,076 in the same month last year.

Stricter emission rules that took effect in January have caused U.S. truck sales to plunge 54 percent, causing Volvo AB, the world's second-largest truckmaker, to post its biggest profit decline in 18 months. The company's shares fell the most in more than eight years.

Volvo's second-quarter net income dropped 14 percent to $600 million.

Mack braced for a downturn in deliveries last fall by announcing it would lay off 450 of 1,040 workers at its Lower Macungie Township plant, where it makes heavy-duty trucks. But the company said last week that it instead laid off 350 employees.

Sales peaked in 2006 as buyers snatched up trucks before new emissions standards made them more expensive. The stricter EPA emissions standards took effect Jan. 1, increasing prices as much as $7,500 per $100,000 truck.

The reduced demand this year, which Mack expected to last at least through June, shows no indication of recovering, and has been compounded by weakness in freight hauling and housing construction, according to the company.

The slump is being felt industry-wide and will likely last until the tail end of 2008, according to Jim Winsor, executive editor of Heavy-Duty Trucking, an industry magazine. Heavy-duty trucks used in the garbage, construction and freight industries range in price from $85,000 to more than $100,000.

Mack production also slowed earlier in the year because of production difficulties. The company's 2007 trucks have engines that have been completely redesigned for greater power and efficiency and reduced emissions, which meant vast changes on the production line.

Mack launched a tour in June from Las Vegas to promote its new trucks. The tour runs into the fall with more than 150 stops at cities throughout the United States and Canada, including Lancaster, Scranton and Allentown at a date to be announced.

"We're encouraged by the fact that initial customer reaction to our [2007] trucks, particularly the performance of our new engines, has been very positive," Mack's media relations director John Walsh said.

Mack also employs 1,000 people at its Allentown headquarters and testing site.

Volvo, which sold its car division to Ford Motor Co. in 1999, is the world's second-largest truckmaker behind DaimlerChrysler AG. In Europe, Volvo trucks also sell under the Renault Trucks brand, and the company's other businesses include buses, construction equipment and engines.